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ELCDismissedNotice of Motion dated 23rd May 2019 (ruling in ELC suit, decree dated 15th February 2019)· [2019] KEELC 1277 (KLR)

Kifaru Investment Limited & 6 others v Kihingo Village (Waridi Gardens) Limited & another [2019] KEELC 1277 (KLR)

Environment and Land Court
26 September 2019
1,438 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court refused to enforce parts of an arbitration award because conflicting court orders were already in place and the award didn't cover the assets in question.

What this practically means

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Executive summary

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The decree holders, who had obtained judgment in terms of a sole Arbitrator's Final Award published on 28th July 2016 (adopted as judgment by ruling dated 6th February 2018), moved the Environment and Land Court by notice of motion dated 23rd May 2019 seeking execution-related reliefs: appointment of FAPCL Group Limited to manage Kihingo Village (Waridi Gardens) estate, injunctions over the reversionary interest and club house on LR 27754 (IR No. 108885), compelled transfer of that interest, rectification of the 2nd judgment debtor's register to remove Class B shares and shareholders, and contempt proceedings against James Ndungu Gethenji and Chacha Mabanga. The judgment debtors and Chacha Mabanga opposed, arguing the court was functus officio, the decree was extracted unprocedurally, and the reliefs conflicted with subsisting status quo orders in Petition E105 of 2018 before the High Court Commercial, Admiralty and Tax Division. The court framed four issues and held that it was not functus officio, since under Section 34(1) of the Civil Procedure Act the executing court determines all questions on execution, and the draft decree had been shared with and objected to by the judgment debtors. However, the status quo orders of 4th December 2018 in Petition E105 of 2018 remained in force, making the orders sought futile; further, the club house and Class B shares were not mentioned in the Final Award. The court declined to grant prayers 5 to 11, directed that the judgment debtors should not interfere with provision of services and utilities to the estate, and ordered each party to bear own costs. Ruling delivered at Nairobi on 26th September 2019 by L. Komingoi, Judge.

Key legal issues

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01

Functus officio

Holding

The court is not functus officio in respect of execution of the decree adopted from the arbitral award.

Reasoning

The dispute was arbitrated, an award published on 28th July 2016, and by ruling dated 6th February 2018 judgment was entered in terms of the award; the decree extracted has not been set aside. Under Section 34(1) of the Civil Procedure Act, questions relating to execution, discharge or satisfaction of a decree are determined by the executing court, not a separate suit. The court must therefore remain seized to ensure its orders are executed.

p. 3
02

Effect of subsisting orders in Petition E105 of 2018

Holding

The status quo orders of 4th December 2018 in Petition E105 of 2018, still in force, preclude granting prayers 5 to 11.

Reasoning

The High Court ordered that pending the petition, the status quo prevailing in terms of directorship of the nominal respondent and provision of utilities and services to members shall prevail. Those orders remain undischarged. Granting the applicants' prayers would be futile and not in the interest of justice; the decree holders must elect which case to proceed with.

p. 3
03

Entitlement to the prayers sought

Holding

The orders cannot be granted as sought because they extend beyond the terms of the Final Award.

Reasoning

The court adopted the sole Arbitrator's Final Award and a decree was extracted which has not been set aside. Execution must follow the normal execution procedure and conform to the terms of the Award. The club house and Class B shares referenced in prayers 6 and 8 are not mentioned in the Final Award, so the court cannot grant the orders as framed.

p. 3
04

Contempt against the director

Holding

The directors were not cited for contempt; the application for contempt reliefs was refused.

Reasoning

The contempt reliefs were contained in prayers 9 to 11, which the court declined to grant in view of the subsisting status quo orders in Petition E105 of 2018. The court did not reach the merits of the corporate veil argument but declined the orders as sought.

p. 3

Legal principles established

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  • A court executing a decree is not functus officio, as all questions relating to execution, discharge or satisfaction of the decree must be determined by the court executing the decree and not by a separate suit.
  • Where a judgment debtor received and objected to a draft decree, the decree cannot be said to have been extracted unprocedurally.
  • A court will not grant execution-related orders that would be futile while subsisting orders in another pending case remain in force.

Court orders

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  1. 1.The court declined to grant prayers 5 to 11 of the application
  2. 2.The judgment debtors should not interfere with the provision of services and utilities to Kihingo Village (Waridi Gardens) Estate
  3. 3.Each party to bear own costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 40, 48, 159(2)
  • Environment and Land Court ActSections 14, 29
  • Companies ActSection 363 (printed as '863')
  • Civil Procedure ActSections 1A, 1B, 3A, 34(1), 63, 98
  • Civil Procedure Rules, 2010Order 9 rule 9; Order 51 rule 1; Order 21 rule 8
Jurisdiction invoked
Articles 40, 48 and 159(2) of the Constitution; Sections 14 and 29 of the Environment and Land Court Act; Sections 1A, 1B, 3A, 63 and 98 of the Civil Procedure Act; Order 9 rule 9 and Order 51 rule 1 of the Civil Procedure Rules, 2010

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kifaru Investment Limited & 6 others v Kihingo Village (Waridi Gardens) Limited & another [2019] KEELC 1277 (KLR)", Case Analysis (2019). Notice of Motion dated 23rd May 2019 (ruling in ELC suit, decree dated 15th February 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/1277/eng@2019-09-26

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.